Q&A: ACLA Lawyers Clement, Tribe Discuss FDA's Legal Problem in Regulating LDTs

NEW YORK (GenomeWeb) – Well before the US Food and Drug Administration issued guidance outlining its plan to oversee laboratory-developed tests (LDTs), the American Clinical Laboratory Association (ACLA) said the agency doesn't have the legal authority to regulate the industry.

The tests labs develop in house might use devices that are regulated by the FDA, but that doesn't make LDTs themselves devices, the group has held. For example, a radiologist reading an x-ray depends on an x-ray machine – an FDA-regulated device – but the agency doesn't control how the radiologist reads that x-ray. Similarly, lab tests might depend on devices, such as reagents, but lab professionals perform and interpret testing, ACLA has maintained. That testing service is an integral part of the practice of medicine, and the FDA doesn't regulate the practice of medicine.

Despite much pushback from ACLA over the years, the FDA in October went ahead and released a draft version of its guidance, laying out a risk-based framework for regulating LDTs that it plans to phase in over nine years. The lab industry group isn't happy with this, and has asked the FDA to retract the document. Except this time, to add some gravity to its words, ACLA hired two legal heavyweights, Paul Clement and Laurence Tribe, to make their case to the agency. 

Clement and Tribe, on behalf of ACLA, released a 25-page white paper last week laying out the legal arguments for why FDA holds no jurisdiction over LDTs. While ACLA hopes that the document will convince the agency to drop its efforts to regulate labs, the group has not made a decision about taking formal legal action. "At this time, we have made no affirmative action to litigate. That has not even come to a vote yet" within ACLA, said Scott McGoohan, VP of reimbursement and scientific affairs for the association. However, in retaining counsel, "it underscores and illustrates exactly how seriously we take this matter," he said. "We're continuing to consider every option as we go forward and continuing to engage with the agency, the Administration, and the Hill on this matter."

Clement, a partner at the law firm Bancroft PLLC, was US Solicitor General from 2005 to 2008 and has argued 75 Supreme Court cases. Tribe has been teaching at Harvard Law School since 1968 and holds the distinguished title of "university professor." In an interview with GenomeWeb, Clement and Tribe explained their legal arguments for why FDA lacks statutory authority over LDTs and why Congress never intended for lab testing services to be overseen by the agency. Below is a transcript of the interview that's been edited for clarity.

Let's start with the key statutes. There are three to keep in mind, and in chronological order, they are the Clinical Laboratory Improvement Act of 1967, the Medical Device Amendments of 1976, and the Clinical Laboratory Improvement Amendment of 1988. The clinical labs were regulated initially under CLIA in 1967, and that was amended in 1988 by Congress. In the meantime Congress enacted medical device regulations in 1976, under which FDA says it has authority to regulate LDTs. Why are these statutes and their timing critical to understanding how you believe Congress intended LDTs to be regulated?

Tribe: The text is even more informative than the timing, but the two work together. The position of the FDA that the Medical Device Amendments of 1976 actually gave it authority to regulate laboratory testing services as though they were devices is flatly contradicted by the text's own definition of a device as an article of commerce. But when you set it in the context of the legislation [that came] both before and after [the MDA,] it really becomes hard for me to imagine that any court could see this the way the FDA does.

In 1967, when CLIA was first enacted, there was no suggestion that it was dealing with anything the FDA could have dealt with. When the MDA was enacted [in 1976] there was no reference to the existence of a prior regulatory scheme for clinical labs. When you look at that background and consider that, in 1988, Congress broadened the reach and tightened the depth of CLIA, they would have proceeded in a way that would have been completely redundant if the MDA in 1976 would have already subjected tests to a regulatory scheme under the FDA. Then it's clear that Congress from the beginning has not contemplated that medical lab tests would be regulated simultaneously by CMS and FDA. On the contrary, the sequence of enactments and the legislative history show that Congress wanted to avoid duplicative, and insisted on coherent, regulation of laboratory testing as an aspect of the practice of medicine. This makes it really perplexing how the FDA could imagine that Congress had granted it this unmentioned power that it hasn't exercised but that it claims it has the authority to exercise.

Clement: The chronology and text of the statutes reinforce each other. In 1967, when Congress wants to address clinical labs in the first instance … of course, they regulate in terms of the labs and the services they provide. In 1976, when Congress is addressing a very different problem, namely medical devices, they regulated that in terms of "devices" and "articles" of commerce, which are words that don't naturally apply to clinical laboratory testing services. In 1988, when Congress wants to improve the regime for regulating clinical laboratory testing services, they again use the language of services. They don't use the language of devices. The chronology really reinforces the textual point that Congress knows the difference between devices and laboratory services.

The 1988 amendments improving the regulation of clinical labs and giving that authority to the Centers for Medicare & Medicaid Services is particularly telling. When Congress is considering those amendments, they're trying to improve the existing regime of regulation at a time when they thought there were really some needs for improvement. In the way that Washington works, if the FDA had been given the authority in 1976 to  regulate labs, a Congress that was trying to give additional authority to regulate labs would have had the head of the FDA in the hot seat asking all sorts of questions [such as] "Why haven't you exercised the authority we gave you in 1976?" That just didn't happen. The FDA went unmentioned and Congress augmented the authorities they gave to HHS and CMS.

From a historical standpoint, as a public health organization, why wasn't FDA given authority over labs from the get-go in 1967? Was there a reason Congress chose CMS to regulate labs?

Tribe: Congress was smart enough to recognize that regulating [through the FDA] standardized drugs and devices that are distributed into interstate commerce after being manufactured  … would be consistent with maintaining public health. At the same time, it was clear that lab tests, which are protocols and methods that in theory can be done in a doctor's office if there weren't dramatic resource limitations, would have to keep pace with evolving science and technology. They can't be put through the hoops that you quite naturally would want to subject drugs and devices to before they become available. The public clamor for the best available medical techniques and processes for assisting doctors in making diagnoses would be enormous if they were all squeezed through the eye of the FDA needle.

All along when the FDA tries to define things, it talks in terms of instruments, apparatus, machine, contrivance. The inclusion of in vitro reagents in that list in section 321h of the 1976 MDA really underscores the point and was intended to recognize the difference between lab-developed testing services and some of the substances, including reagents that may be used in the process of those services.

The crux of ACLA's argument against FDA regulation is this idea that LDTs are part of the practice of medicine and not devices. In the white paper you provide a number of examples to illustrate this point, notably the one about a radiologist making use of a regulated device – an x-ray machine – but the radiologist's reading of an x-ray isn't regulated by the FDA. Someone who is pro-regulation considering this example might ask why a test that a lab furnishes can't be similarly regulated even if it has a human interpretive component, the lab professional.

Tribe: There is a background assumption that the practice of medicine, including diagnosing patients and telling them, 'I think we'd better x-ray your hip,' is a quintessential state responsibility. There are background constitutional principles that make it challenging at best to defend an intrusive federal regulatory apparatus that would preempt state regulation of how physicians diagnose and treat their patients. That background has always informed the way Congress proceeded and has been made explicit in the language of the FDA regulatory apparatus by saying that it is not to be understood as interfering in any way with the practice of medicine.

[During FDA's two-day public hearing on LDT regulation last week] Edward Ashwood, [CEO of ARUP Laboratories,] brought the audience to its feet when he said he was sickened by the adverse effects that would happen on patient care if suddenly a federal agency entered the doctor's office. That really is the premise on which treating laboratory testing services as devices would have to proceed.

The x-ray example is one that both Paul and I found intuitively helpful because we walked through some of these labs and looked at the testing they do. It became obvious in principle that what they're doing is not really any different. Once you say that all of these services that are conducted inside a lab rather than in a doctor's office, for reasons of efficiency and economy, are to be treated as if they were objects of commerce, the game is over in terms of distinguishing what physicians regularly do from … the manufacturing and distribution of pharmaceuticals.

There would be no limit to the FDA's jurisdiction.

Clement: This radiology analogy is powerful when you keep in mind the nature of FDA's argument. It starts with the recognition that they do have a problem, call it a square-peg-round-hole problem. The testing services aren't any of the articles that the MDA refers to. So, the best the FDA can do for its argument is say, "Well, the testing services may use medical devices, or may use an in vitro reagent, and therefore, that's kind of close enough."

That would be a tenuous argument even in the abstract but in the context of this backdrop that the FDA cannot regulate the practice of medicine, then their argument doesn't work at all. All manner of the practice of medicine involves the use of medical devices. So, it doesn't help the FDA at all to say that testing services are sort of like devices because the testing services use devices. That would say that every doctor that uses a medical device could be regulated by the FDA. No one, I think including the FDA, thinks that's really a sustainable proposition.

Tribe: When a surgeon uses a scalpel, he's using a device. Except the stuff that uses the doctors' own ears, eyes, and hands, even if all that's used is a stethoscope, everything the doctor does would become a device based on the FDA's theory. There would be no limit to the FDA's jurisdiction.

You say in the white paper that if FDA does regulate LDTs, the agency could run afoul of the First Amendment. What is the legal precedence to suggest that this could be another argument against the agency?

Tribe: In the paper we cite a number of cases involving abortion counseling and other instances when the Supreme Court, in rendering its decision about the way in which the federal government can impose regulations, has mentioned in passing the important constitutional principles of information processing. There are only a few modern cases that have taken up the question of whether what a doctor tells a patient in trying to improve the patient's health can be directly regulated without running afoul of the First Amendment. They involve very different problems from these [LDT-related issues]. They involve doctors asking patients if they have guns in their homes or trying to tell patients that they can change their sexual orientation. This is kind of a cutting edge area, but it's part of the background.

Let's address FDA's exercise of enforcement discretion over LDTs and how you interpret that in the white paper. You note that it's unlikely that for four decades FDA would practice "enforcement discretion" over LDTs – that it chose not to exercise the oversight powers it always had – if the lab industry was operating unlawfully. The more "plausible hypothesis" is that the industry's practice was not unlawful, you write. You further describe the FDA's move to regulate LDTs as a "power grab." Yet, the agency has said repeatedly that it has tried in different ways to regulate LDTS since the 1990s, notably through guidance on in vitro diagnostic multivariate index assays in 2007. Doesn't that cut against your claim that FDA's practice of enforcement discretion is a power grab and not necessarily due to a concern over unlawful behavior?

Clement: I don't think so at all. Even though the FDA on one or two occasions has expressed interest in regulating this area, it has always been subject to extemporaneous objections. Also, it's never been effectuated. The consequence of the FDA's current theory is that ever since 1976 the use of the testing services has really been the trafficking in unauthorized medical devices. It's a breathtaking proposition. It would mean that all of the labs have been operating essentially unlawfully and have not been prosecuted because of the administrative grace of the FDA and the [Office for the] US Attorneys. It would also mean that all the doctors who routinely use the services of the labs have been engaged in this unlawful traffic.

The FDA's problem is evidence on the front end, as well as the back end. It's not just that they haven’t exercised this authority for 40 years. But now that they're asserting this authority, they can't say that starting tomorrow they will regulate all LDTs in a particular way. They have to recognize they don't remotely have the resources to undertake that effort on day one. So, they have this elaborate rollout through the guidance where they would purport over a nine-year period to classify all the testing services and regulate them in various ways.

The Supreme Court [in the case Utility Air Regulatory Group v. Environmental Protection Agency] confronted a very similar argument last term in the context of a different regulatory regime. [Editor's Note: Specifically, the court wrote that since the EPA's interpretation of the Clean Air Act would "place excessive demands on limited government resources," it’s a good reason to reject it.] The fact that the FDA can't assert the full authority that it's purporting to assert and have to gradually roll it out, … is further evidence that Congress didn't give the agency that authority in the first place.

Tribe: If Congress had given FDA that authority, it surely would have accompanied it with some modicum of adequate resources. It's notorious that the FDA is constantly saying in briefs and in testimony that it doesn't have the resources to even do what it is expected to do now. If there were an urgent need to do something through the FDA that CMS is not doing, the idea that the response would be almost a decade-long roll out is very hard to comprehend.

In a somewhat analogous area, when the FDA said it had the authority to regulate tobacco products [in FDA v. Brown & Williamson Tobacco Corp], that at least was a more plausible, textual claim. A cigarette is an article, it's manufactured, it's distributed in interstate commerce. But the Supreme Court's response was that Congress shouldn't be presumed to address huge issues in a cryptic, indirect way. There is a wonderful phrase … that 'Congress doesn't hide elephants in mouse holes.' That's clearly what it would have done [if the 1976 MDA gave FDA authority over LDTs]. This would have been a rather large elephant in a tiny mouse hole.

At the public hearing last week, one speaker compared FDA's ability to regulate certain compounding pharmacies as being reflective of the agency's thinking on LDT regulations. Congress amended the Federal Food, Drug, and Cosmetic Act in 2013 to limit FDA oversight of certain types of pharmacies compounding patient-specific drugs, while stating that pharmacies compounding non-patient-specific batches of drugs have to meet FDA regulations. Do you think Congress has a role to play in differentiating when FDA can regulate certain types of LDTs, for example non-traditional tests, such as algorithm-based LDTs or direct-to-consumer tests?

Clement: We try to convey in the white paper that if there is to be additional congressional action in this area, one threshold question would be whether they want to refine CMS' role and really build on the 1988 amendments, which are much more focused on the labs. Or do they want to get the FDA involved in a limited universe of testing services that may bear a particular resemblance to some device that's on the market or that may raise a particular concern? There might actually be arguments for building on the existing regime, as opposed to giving the FDA a limited authority.

If they did give FDA some new authority that was limited, it would have two advantages. One, it would clearly demarcate what FDA is supposed to address, so it wouldn't have to get into this awkward nine-year roll out where it tries to differentiate among the services in a way that then corresponds to some kind of priority for regulating them. Congress would speak directly to it. The second advantage … is then it would give FDA some new resources to discharge that function.

Tribe: I agree with that completely, but I'll also say that it's convenient but quite irrelevant to distinguish between a testing protocol that has been expressed mathematically in an algorithmic form from a protocol that is as much art as science, that isn't expressed in terms of linear equations. The key in deciding whether something is a device is to consider whether it is a manufactured object that has been included in a test kit that has been put on the market as a standardized thing. Whether it is done in a black box or otherwise, it is using the lab's knowhow and proprietary processes. I think the attempt to say that some of these [LDTs] are more mysterious than others because of an algorithm is just a convenient way of targeting something rather arbitrarily.

Let's move on the question of whether FDA should have issued a guidance or if it should have pursued more formal rulemaking. In an interview recently, Alberto Gutierrez, [director of the Office of In Vitro Diagnostics within FDA's Center for Devices and Radiological Health], said that by issuing guidance the agency is changing its enforcement of requirements that already exist in statutes. And under the Administrative Procedures Act, according to the agency, it doesn't need to issue a rule to change enforcement policy. But ACLA believes the agency's proposed LDT framework fits APA's definition of a rule. What makes the content of FDA's guidance worthy of a rule in your view?

Tribe: The fundamental principle in the APA is that when binding substantive obligations are imposed, which are not simply helpful hints in the form of advice, then that is a real change in the law. And this needs to be done carefully with full public comment. The agency has an obligation to respond to those comments and do a cost-benefit analysis. These things don't have to happen when an agency [is issuing guidance] just to help you understand what it has already said.

There is a wonderful phrase … that 'Congress doesn't hide elephants in mouse holes.'

A number of scholars in the administrative law field have noted that there have been dramatic increases in the number of steps the FDA has taken through guidances and that aren't adopted through the kinds of public procedures that the APA put in place. This [LDT guidance] is really the straw that breaks that camel's back. This is far from what a mere guidance is supposed to do as I can imagine. 

On that point, there is a statistic in the white paper that some 40 percent of proposed rules are withdrawn based on the negative comments it receives. There were plenty of negative comments at the public workshop that the FDA held. How would notice-and-comment rulemaking increase the pressure on FDA to retract the guidance? Isn't there sufficient pressure on the agency to abandon its plan now?

Tribe: It's not just a matter of pressure. It's a matter of obligation. The question is what is the FDA going to do with all these comments? How seriously does it have to take them? Does it have to respond? And does it have to do the kind of careful economic analysis of what [its regulation] will do to the practice of medicine and to the ability of lab testing to keep up with scientific advances? There are a number of questions of that kind that are not at the moment required to be addressed as long as this is proceeding only by guidance.

Some in the lab industry are speculating that this white paper is a sign that ACLA is getting ready to sue the agency. Has ACLA made a decision in this regard and what needs to happen for you to pull the trigger?

Clement: I think the hope that underlies the white paper is that it will obviate the need for there ever to be litigation over this. It's somewhat unusual to put out a white paper that lays out all of your arguments in advance of potential litigation. I don't want to speak authoritatively for my client on this, but certainly the reason for putting out these arguments at this early stage made sense to me because the arguments are powerful and overwhelming. There really is reason to hope that the FDA will strongly consider these arguments and reconsider whether it has the authority to do this at all and certainly, whether it has the authority to do this over guidance, rather than notice-and-comment rulemaking. If the FDA takes the arguments in this paper seriously, then I don't think it will ever need to come to litigation. And that would serve everybody's interests.

Tribe: If one has already given up the hope of persuading an agency, then one doesn't reveal quite as much as this white paper does. I mean, we haven't really held a lot back. This is something that we think an agency that at all has an open mind ought to listen to and might take seriously. And there is also the fact that the agency, if it does come to litigation, has a great deal to risk. Its frequent use of guidance could be more broadly questioned than it might like. The loose way it defines devices might also be questioned. All sorts of things are up in the air, and it's at least part of the hope that the agency realizes that if it doesn't take these arguments seriously then it might be biting off more than it can chew.

In a follow-up Q&A, John Conley, a lawyer specializing in intellectual property and civil litigation at the firm Robinson Bradshaw & Hinson, plays devil's advocate, answering some of these same questions by reflecting on FDA's position.